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Standard & Poor's Downgrades Monrovia's Credit Rating

A further downgrade in the Monrovia's credit rating is possible because of a massive lawsuit filed against it by a local developer.

Standard & Poor's Rating Services downgraded Monrovia's credit rating and could lower it even further if the city's fiscal problems persist, Reuters reported Wednesday.

The city's issuer rating was dropped by S&P from an A to a BBB-plus and its pension obligation and lease revenue bonds were reduced from A-minus to BBB-plus as well, according to Reuters.

"The lowered ratings reflect our view of the substantial drop in the city's available general fund reserves and liquidity and the likelihood that the city's reserve and liquidity levels will remain low in the near-term," said Standard & Poor's credit analyst Li Yang in a written statement on the agency's website.

S&P said the against the city contributed to the agency's "negative outlook" about the Monrovia's ratings.

"The negative outlook reflects our view of the potential fiscal strain related to a lawsuit between the city and a local developer that was filed on Aug. 24, 2012; due to the city's financial situation, if it fails to manage its liquidity needs in the next year, we could lower the rating further," Yang wrote.

Gustav Hellbro September 05, 2012 at 10:35 PM
It seems premature to downgrade the S&P rating based on a potential suit. From what I understand, the City has only received a rough draft that had not be filed. Maybe S&P should get rid of the crystal ball and work on facts.
Dan Crandell September 07, 2012 at 06:58 AM
What the hell is a BBB-plus ???? Why do bean-counters always present the absurd in their conclusions. Well why not ... the games people play with other peoples money and stability.
Robert Parry September 07, 2012 at 07:06 AM
It's industry short hand. Everyone in the bond biz knows what those ratings mean by heart. BBB = Adequate capacity to meet financial commitments, but more subject to adverse economic conditions. http://www.standardandpoors.com/ratings/definitions-and-faqs/en/us#def_1
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